Looking back on Magnetar’s marketing and Paulson’s ski pad

July 13, 2011   Josh Friedlander


This week, AR also revisits how golf changed Stan Druckenmiller’s life.

One year ago

»» Magnetar Capital, looking to rebuild its assets, was seeking a marketing executive. The firm wouldn't comment about whether it made a hire, but its fundraising efforts coupled with its performance (information about which could not be obtained) resulted in assets increasing by about $700 million in the past year. The firm, which managed $7.1 billion on July 1, 2010, had reached $7.5 billion six months later, according to the AR Billion Dollar Club, and Magnetar managed $7.8 billion as of May 31. Part of that increase came from the rollout of a new event-driven fund in October 2010, which was expected to launch with as much as $200 million.

Magnetar's assets hit a peak of $8.3 billion on January 1, 2008, but losses and redemptions decreased assets to $6 billion by July 2009. The firm's recent fundraising occurred while it was enveloped in a fog of regulatory uncertainty that only recently lifted. Magnetar was being investigated by the U.S. Securities and Exchange Commission as part of a probe of deals involving collateralized-debt obligations. That investigation recently resulted in a $153.6 million payment by JPMorgan to settle charges that it had not provided appropriate disclosures to investors on the other side of a trade that was constructed for Magnetar. Magnetar pointed out in a recent statement that it was not involved in the settlement and is no longer under investigation. "In fact, the SEC Staff issued a closing letter to Magnetar stating that it does 'not intend to recommend any enforcement action' against Magnetar, any of its funds or any current or former Magnetar personnel in connection with that investigation," the firm said in the statement.

»» John Paulson bought an Aspen estate, adding to a collection of property that includes a Southampton waterfront manse and a 20,000-square-foot home on the Upper East Side of Manhattan. Buying more real estate was consistent with his prediction that the U.S. could suffer double-digit inflation starting as early as 2010. "If you don't own a home, buy one," he reportedly said in a speech at the University Club in 2010. "If you own one home, buy another one, and if you own two homes buy a third and lend your relatives the money to buy a home."

Given his earnings of $4.9 billion in 2010, according to AR's Rich List, Paulson could almost certainly buy enough real estate to create a significant personal exposure to that asset class. Instead, he continues to be bullish on gold as protection against inflation.

Five years ago

»» In becoming a founding member of the Sebonack Golf Club, Stanley Druckenmiller's paid $1.5 million (inclusive of the $650,000 membership fee), so that he'd have the right to first pick on tee times.

The Duquesne Capital Management founder's love of golf was a catalyst in his decision to retire from the hedge fund industry. According to Bloomberg, when the maven cited work as a reason to decline a friend's invitation to go golfing, he was asked, "Are you crazy? You've been doing this for 30 years. You are a billionaire. You can't take a couple of days off to play golf?" The exchange prompted Druckenmiller to end his storied 30-year career (read his final investor letter here). In addition to golf, Druckenmiller decided to focus on philanthropy.



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